Core ideas:

1. In the second quarter, the trading activity of Hong Kong stocks ranked third in the past decade, and the average daily turnover maintained the high range of the previous quarter. In 2020, the average daily turnover of Q2 shares in Hong Kong reached 96.84 billion yuan, a small increase of 2.55% over the previous quarter. Liquidity has remained active and high for two consecutive quarters, and liquidity continues to increase.

2. From the perspective of market capitalization structure, leading companies further siphon market liquidity, and the liquidity improvement of medium-sized companies is the most obvious. 2020Q2, Hong Kong stock market capitalization Top1% company (market capitalization 3.5766 trillion-865.5 billion Hong Kong dollars) accounts for nearly 50% of the total market turnover (market capitalization 3.5766 trillion-53 billion Hong Kong dollars) accounts for more than 70% of the total market liquidity, and the effect of Hengqiang, which has strong market liquidity, continues to strengthen.

3. From the perspective of industry structure, the liquidity of Q2 information technology sector, optional consumption sector and financial sector ranked in the top three in 2020. Among them, the liquidity of health care and optional consumer sectors has continued to increase recently, and the turnover has exceeded that of Hong Kong's financial industry for many weeks in this quarter.

Before the formal analysis, it is necessary to explain the statistical caliber of this article.The time span of this article covers 41 quarters of the past decade. The object of statistics is all the listed companies of Hong Kong stocks in each period, and excludes Microsoft Corp-T, Cisco Systems-T and other targets whose trading volume is almost zero. Compared with the Hang Seng Index, the statistical object of this paper does not include derivatives such as CBBC, so the average daily turnover is likely to be less than the Hang Seng Index.

In terms of statistical indicators, this paper mainly uses "average daily turnover per quarter" as an index to measure liquidity at that time.For example, the average daily turnover of 15-year Q2 refers to the sum of the average daily turnover of all Hong Kong stocks in the 90 days of the second quarter of 15 years, as a measure of liquidity activity during this period. In the industry analysis, the turnover of the industry in a certain week is used as statistical data.

I. aggregate analysis: Hong Kong stocks maintained high liquidity in the last quarter

In terms of total volume, the turnover of Hong Kong stocks in the first half of 2020 is very active.In 2020, the average daily turnover of Q1 and Q2 reached HK $94.429 billion and HK $96.84 billion, ranking among the top three in the past decade for two consecutive quarters. In the second quarter, a number of popular Chinese stocks and medical stocks were listed in Hong Kong, which significantly enhanced the trading atmosphere of Hong Kong stocks. As the southbound funds of Hong Kong stocks from the mainland and overseas funds continue to increase liquidity for Hong Kong stocks.

In addition, the active trading of hot stocks contributes a lot of liquidity to the market.2020Q2, Hong Kong stock hot TMT stocks such as Tencent, Meituan Dianping, Semiconductor Manufacturing International Corporation and other stocks have repeatedly reached new highs, driving the trading activity of the Hong Kong stock market.

As Hong Kong stocks are still in a historically low range of valuations, Hong Kong Stock Exchange funds from the mainland and overseas funds continue to flow into the Hong Kong stock market in Q2, providing incremental trading funds for the Hong Kong stock market.

From a structural point of view, the average daily turnover and the company's market value basically maintain a positive proportion.In 2020, the average daily turnover of companies with Q2 ranking Top1% by market capitalization reached 39.898 billion yuan, maintaining the high level in the first quarter. It is the most active market capitalization range in the market, accounting for more than 50% of the average daily turnover of Hong Kong stocks. The liquidity of the market is still siphoned by companies with head market capitalization.

In the first half of the year, companies with Top5% market capitalization accounted for more than 70 per cent of market liquidity, maintaining a high range of nearly a decade.Since 2019, the liquidity of the top 5% of Hong Kong stocks (the top 5% by market capitalization) has shown a trend of continuous strengthening, and the top 5% of companies have eaten more than 70% of the market turnover. It can be seen that in the Hong Kong stock market, the market style of chasing quality and leading companies has become the norm.

This means that large-cap companies are still the most important area for investors to focus on.The correct pricing of stocks must be given plenty of liquidity, and the activity of large market capitalization companies determines that their stock prices can be fully excavated and discovered by the market. In the style in which liquidity favors large market capitalization companies, it is the wisest choice to choose individual stocks to invest in the range of large market capitalization and high trading volume.

By contrast, illiquid stocks, even if the company is of good quality, are difficult to sustain a sustained inflow of institutional capital because of lukewarm trading. The reason is simple, a company with an average daily turnover of only a few million stocks, once there is a large-scale inflow of institutional funds, it is easy to pull the share price to the sky, institutional funds naturally stay away from this part of the stock.

The market is always right, and when the market style favors big votes, the right thing to do is to follow the trend and focus on large-cap companies.

In terms of marginal changes, the liquidity of shoulder companies (market capitalization Top5%-20%) increased most significantly in the first half of the year.Against the background of a high Q1 base in 2020, Top5%-20% companies maintained an average quarter-on-quarter growth rate of 18.23% in the second quarter, with the highest growth rate in all market capitalization ranges. The main reason is that in the second quarter, there are Kangji Medical, Hagia Medical, minimally invasive Medical, Peijia Medical and other new shares trading hot, driving the average daily turnover in this range to maintain the high growth rate of the previous quarter.

It can be seen that in addition to the head market occupied by giants such as Tencent and BABA, the shoulder base developed by excellent medical units also has a wonderful performance. Shoulder market capitalization companies usually gather a large number of high-growth medical, biological, Internet companies, such as Weimeng Group, Kingsoft, Kangfang Biological and other companies, which rose sharply in the second quarter.

Shoulder companies are usually explosive in terms of growth.The market capitalization of the shoulder company is not too large as that of the head company, and it is less costly and difficult to raise the stock price. When the certainty of the company and the industry is good, the room and explosive power of raising the stock price is much easier than the "elephant dance" of the head. For this reason, investors who seek to hold themselves high may be able to look for opportunities in the shoulder market capitalization range.

The liquidity of companies below the waist decreased significantly compared with the previous month.Due to the high base of daily average turnover of Hong Kong stocks in the first quarter, the growth rate of average daily turnover of most companies in Q2 has slowed down significantly. Among them, the month-on-month growth rate of liquidity of small and medium-sized votes decreased the most. For companies with a market capitalization of less than 50%, the month-on-month growth rate of Q2 average daily turnover fell by 21.36%.

The era when small and medium-sized shares and fairy stocks can soar seems to have passed.

2. Industry distribution: optional consumption and average daily turnover of health care are the most active.

In terms of the distribution of average daily turnover, the three major industries of optional consumption, finance and information technology ranked among the top three in the Hong Kong stock market in the first half of 2020. During the Q2 period, the average daily turnover of optional consumer industries continues to increase in the whole market, including recent popular property, consumer goods and educational defensive companies. In the case of the impact of the epidemic on the economy, a large number of hedge funds have entered the hedge sector, thus the average daily turnover has also been continuously driven.

Reviewing the data of nearly ten quarters, we can see that the industry preferences of the market are stably concentrated in the consumer, financial, information technology and real estate industries, precisely because these industries are home to a large number of giant companies with large market capitals. can accommodate the free flow of large institutional funds, so it is favored by institutional capital and foreign capital. On the other hand, this industry preference will further strengthen the market capitalization scale of popular industries and form positive feedback of high market capitalization and high turnover.

From an incremental point of view, the liquidity improvement in the health care industry was the most significant in the first half of the year. Due to the listing of many popular medical stocks IPO in the first half of the year, the high turnover of the newly listed stock led to the transaction activity of the whole industry. In addition to the listing of hot new shares to enhance the liquidity of the industry, affected by the epidemic, the stock of health care stocks also performed excellently. A number of hot health care companies reached new highs in the first half of the year, and the continuous rise in stock prices naturally attracted a large number of funds in the market.

In the environment of the increase in the total amount of liquidity, all industries and plates can also be stained with rain and dew, and everyone is happy. Once there is a liquidity contraction or hot spot shift, there is likely to be a rotation of funds between industries. Take the recent "bull market" as an example, the popularity of mainland securities and technology stocks in the Hong Kong stock market has risen sharply. Previously, the surplus funds in the medical industry will inevitably be reduced and turned to other hot areas. In the case of insufficient incremental funds, there will naturally be the growth and decline of funds between various industries.

In the short term, if the technology and financial sectors of the Hong Kong stock market continue to rise, and there is no further influx of incremental funds into the market, it is very possible for funds to rotate between different sectors in the future.

Hot stocks traded in the third and second quarter: Tencent and BABA were firmly in the lead, and hot new stocks performed well.

According to Futu Research statistics, in the second quarter of 2020, among the Top20 stocks with the most active daily trading volume, the top three were occupied by domestic popular Internet companies, benefiting from the benefits of the online economy during the epidemic, and the share prices of the three head Internet companies all increased significantly, with Tencent's share price breaking through the 500 yuan mark, reaching an all-time high for many days in a row.

In addition, after the return of the two hot Chinese stocks, JD.com and NetEase, Inc, their trading activity also entered the forefront of Hong Kong stocks, while Semiconductor Manufacturing International Corporation was affected by the overall strong rise of the semiconductor sector in the second quarter, while the stock price rose several times. The trading volume also continued to enlarge, with the average daily trading volume reaching 2.07 billion yuan in the second quarter, also setting a record high in transaction activity.

Under the new upsurge of Hong Kong stocks, Kangji Medical (listed on June 29) and Hagia Medical (listed on June 29) also set extremely high trading volumes on the first day of trading. Among them, the turnover of Kangji Medical reached 3.308 billion yuan on the first day of listing, which even exceeded the average daily turnover of large financial stocks such as Ping An Insurance and AIA Group Limited.

The popularity of popular Hong Kong stocks on the first day of listing is due to the remarkable moneymaking effect of Hong Kong stocks in the first half of the year. From the perspective of the first-hand income distribution of the new lottery, the profit effect of the new shares in the first half of the year is obvious, and the distribution of profits and losses is obviously asymmetric. Under the upsurge of new shares, it has naturally led to a wave of speculation in Hong Kong stocks.

Summary and prospects:

In the first half of 2020, the trading activity of Hong Kong stocks continued to be hot, and the average daily turnover for two consecutive quarters entered the top three of the decade. From the perspective of structure, the siphon effect of head company on liquidity is becoming more and more obvious, and the optional consumer, financial sector and information technology industry performed best in the first half of the year.

For investors, focusing on high market capitalization, hot industries and new stocks remains the most liquid option. In the market stage when the head is king, it is a safe choice to follow the market trend. The explosive growth of high-quality companies in the shoulder range is also worthy of investors' attention.

Taking into account the recent acceleration of Hong Kong stock IPO, and the trend of return of Chinese stocks has been formed, it is expected that Hong Kong stocks will still be able to make active transactions in the near future in the next quarter. In addition, against the backdrop of the release of water by global central banks, a number of indexes of US stocks continued to rise in the first half of the year, while Hong Kong stocks, as a value depression for global investment, are expected to become a source of abundant liquidity overseas, and the future liquidity situation remains optimistic.